Between two bills, a very hard place

Thu, 2012-02-02 17:43

“Everybody needs to keep an open mind as the only way to get a highway bill done is for both the House and Senate to pass a bill. This is a critical first step and as such should not be condemned. We passed the last highway bill in 2005, so we are long overdue for a new one.” –Senator James Inhofe (R-OK), ranking member, Senate Committee on Environment and Public Works

[Inhofe is not nearly as pessimistic, as you can see in the video clip below.]

The biggest sticking point between the two bills (no surprise here) is money. With fuel tax increases largely off the table, Congress is suggesting some very different ways to try and attain what it (and many in the transportation industry) believes is an adequate level of highway funding.

“No doubt both the House and the Senate will pass their versions of the bill in the month or two ahead, although the Senate Finance Committee has yet to come up with $12 billion to $14 billion to fully fund its $109 billion bill,” C. Kenneth Orski, a noted public policy consultant and 30-year veteran transportation expert, recently told me.

Orski (at right) – who served as associate administrator of the Urban Mass Transportation Administration under Presidents Richard Nixon and Gerald Ford and now publishes a transportation newsletter – said reconciling the differences between the House and Senate highway bills could pose a huge problem in what he accurately describes (in my humble opinion) as a “polarized pre-election political climate.”

Those major differences, he said, boil down to these key points: (1) The Senate’s two-year timetable bill vs. the House’s five-year plan; and (2) House reliance on speculative royalties from future oil and gas off-shore drilling to partially fund the proposed $260 billion price tag of the five year bill.

“Fuel tax revenue will provide only an estimated $193 billion over five years according to latest Congressional Budget Office (CBO) projections, leaving a gap of $67 billion in the House bill,” Orski told me. “The oil royalties won’t bridge that gap. As Sen. Inhofe has noted, these royalties are uncertain, distant in time, and wouldn’t contribute more that 5% to 10% of the funding necessary to bridge the gap.”

The House proposal to use revenue from new offshore oil and gas leases, plus the added new wrinkle of making the Keystone XL pipeline part of the bill (my esteemed colleague Brian Straight delves into that thorny issue on his blog), is expected to meet with determined Senate opposition, Orski stressed.

“Transportation Secretary [Ray] LaHood has every reason to be skeptical about the bill reaching the President's desk during this session of Congress,” Orski added.

That isn’t to say the Senate’s two-year proposal offers anything better from a funding perspective. In fact, congressional conferees have warned that the Senate’s bill would deplete almost all resources from the Highway Trust Fund (HTF) by the end of fiscal year 2012.

“Without enactment of a new surface transportation authorization bill with large amounts of additional revenues this year, the Highway Trust Fund will be unable to support a highway program in fiscal year 2013,”

A memo compiled by Taxpayers for Common Sense(TCS) went even further, noting that while Senate’s appropriations committee is willing to acknowledge the lack-of-funding problem, it quickly passes the buck to the authorizers to come up with more cash for future years – and Orski stressed that Senate bill’s authorizers aren't having any luck finding more bucks.

The Senate EPW committee’s $109 billion bill would fund two years of transportation spending by essentially drawing the HTF balance down to zero – and yet still is unable to identify some $12 billion in necessary offsets, Orski pointed out.

Indeed, John Mica (R-FL), chairman of the House Transportation and Infrastructure Committee and primary arbiter of the competing five-year plan, warned the EPW committee last November that its proposal would “essentially bankrupt the HTF and make it impossible to provide any funding for fiscal year 2014.”

Thus, both proposals are stuck with funding gaps – the kind that can’t be closed easily, either, as both Democrats and Republicans become more and more fixated on the Presidential election this November.

“More likely, Congress will enact another extension of the existing law to carry us through the election and into 2013,” Orski believes.